In Apple Inc. v. International Trade Commission, No. 12-1338 (Fed. Cir. Aug. 7, 2013), the Federal Circuit affirmed the ITC's determination that claims 1-7 of Apple Inc.'s ("Apple") U.S. Patent No. 7,663,607 ("the '607 patent") were anticipated by the prior art, while reversing the determination that claim 10 was anticipated.  The Court also vacated the ITC's decision that claim 10 of the '607 patent would have been obvious in light of the prior art and that Motorola did not infringe Apple's U.S. Patent No. 7,812,828 ("the '828 patent").  The Court remanded for further proceedings in accordance with its opinion.

Apple alleged in the ITC that Intervenor Motorola Mobility, Inc.'s ("Motorola") smartphones and tablets infringed various claims of two of its smartphone touchscreen patents.  The '607 patent discloses a touch panel with a transparent capacitive sensing medium that can detect multiple touches at once.  The touch panel contains two layers of indium tin oxide ("ITO") electrodes, one of all rows and another of all columns.  When the screen is touched, the contact position is determined by detecting the displaced charge between the electrodes of the intersecting row and column.  Each layer also contains "dummy" ITO pads to fill in the gaps in the matrix, making the screen appear uniformly transparent. 
The '828 patent discloses a method to determine if the displaced charge corresponds to a finger touching the screen by "mathematically fitting an ellipse" around the touched nodes.

The ITC concluded that U.S. Patent No. 7,372,455 ("Perski '455") anticipated the asserted claims of the '607 patent despite Apple's allegation of conception prior to the filing date.  The Federal Circuit first affirmed that Perski '455 could claim priority from earlier U.S. Provisional Patent Application No. 60/446,808 ("Perski '808") for claims 1-7 of the '607 patent, as the references disclosed the same sensor matrix and multitouch algorithms.  The Court further agreed that claims 1-7 of the '607 patent were anticipated by Perski '455, noting that the scanning algorithms disclosed were very similar despite Apple's claims to the contrary.  But the Court held the ITC incorrectly concluded Perski '808 incorporated by reference a particular application relevant to claim 10.  Consequently, the Court stated the ITC lacked substantial evidence to determine that claim 10 of the '607 patent was anticipated by Perski '455.

If claim 10 was found not to be anticipated by Perski '455, Motorola argued the Court should reverse the ITC's decision that a technology called SmartSkin did not anticipate claim 10, stating SmartSkin's disclosure would have enabled a touchscreen using transparent ITO electrodes.  SmartSkin used a projector to display an image on an opaque surface covered with a grid of copper electrodes, enabling the surface to operate as a touchscreen.  The Court agreed with the ITC, stating that the only discussion of transparent electrodes appears under the "Conclusions and Directions for Future Work" section.  The Court stated that "[t]here is no disclosure that the authors had achieved a transparent touch screen and the record does not indicate that it would have been routine to do so."  Slip op. at 12.

The Federal Circuit went on to vacate the ITC's decision that the '607 patent claims would have been obvious in light of SmartSkin in combination with a related patent application, Unexamined Japanese Patent Application No. 2002-342033A ("Rekimoto").  Apple asserted that the ITC improperly ignored its objective evidence of secondary considerations, including industry praise for the iPhone, the copying of the iPhone by nearly every major cellphone manufacturer, and the commercial success of the iPhone.  The ITC issued findings regarding the first three Graham factors and concluded that claim 10 was obvious, but the Court noted it "never even mentioned, much less weighed as part of the obviousness analysis, the secondary consideration evidence Apple presented."  Id. at 15.

"We have repeatedly held that evidence relating to all four Graham factors—including objective evidence of secondary considerations—must be considered before determining whether the claimed invention would have been obvious to one of skill in the art at the time of invention."  Slip op. at 14.

The Court explained that it was "troubled by the ITC's obviousness analysis."  Id. at 14.  While the Court held the ITC's fact-findings regarding what the references disclosed were supported by substantial evidence, the failure by the ITC to analyze the "secondary considerations" evidence was not harmless error.  The Court explained that "evidence relating to all four Graham factors—including objective evidence of secondary considerations—must be considered before determining whether the claimed invention would have been obvious to one of skill in the art at the time of invention."  Id.  The Court reasoned that "secondary considerations" evidence can establish that an invention appearing to have been obvious in light of the prior art was not, and so could not be categorically ignored. 

Finally, the Court vacated the ITC's conclusion that Motorola did not infringe the '828 patent.  The Court overturned the ITC's construction of the term "mathematically fitting an ellipse," which required that "an ellipse is actually fitted to the data."  Id. at 18 (citation omitted).  The Court agreed with Apple that the method fits an ellipse by calculating the parameters of that ellipse.  Having adopted this claim construction, the Court vacated the decision of noninfringement and remanded.

Judge Reyna concurred-in-part and dissented-in-part.  In his view, Perski '455 should not be able to claim the priority date of Perski '808 due to critical differences, and thus stated the decision should have been remanded on anticipation.  Judge Reyna further dissented to the majority's remand of the ultimate legal question of obviousness.  He would have determined claim 10 was not obvious, as "[o]bviousness is not shown when prior art gives only 'general guidance as to the particular form of the claimed invention or how to achieve it.'"  Reyna Concurrence-in-Part and Dissent-in-Part at 12 (quoting In re Rosuvastatin Calcium Patent Litig., 703 F.3d 511, 518 (Fed. Cir. 2012)).  Judge Reyna, however, agreed that the ITC erred in not analyzing the objective evidence of industry praise, copying, and commercial success.  Judge Reyna wrote separately to emphasize the view that "an invention's recognition in the related industry and its success in the marketplace, along with the other Graham factors, could constitute strong evidence of innovation which could negate an obviousness finding."  Id. at 13.  According to Judge Reyna, the objective evidence of secondary considerations should not just be considered, but it is "the most probative evidence of nonobviousness."  Id. at 16 (quoting Custom Accessories, Inc. v. Jeffrey-Allan Indus., Inc., 807 F.2d 955, 960 (Fed. Cir. 1986)).

Judges:  Moore (author), Linn, Reyna (concurring-in-part and dissenting-in-part)

[Appealed from ITC]

This article previously appeared in Last Month at the Federal Circuit, September 2013

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